Present level of production, Other Management

Assignment Help:

General Components Ltd produces a component ‘X', the selling price of which is Rs 50. The unit cost structure based on the present level of production/sales of 100 000 units is:

Direct materials           Rs 20
Direct labour               Rs 5
Variable Overhead      Rs 2
Fixed overhead           Rs 8

The present level of production represents 100% of capacity working a single shift. The marketing manager estimates that at the present price the quantity sold during the next year could be increased by 50%.

A second shift has been proposed. This would increase production capacity to 180 000 components per annum, fixed costs increasing by Rs 550,000 per annum. A shift work premium of 20% would be payable to the direct workers engaged on the additional shift. However, if production was at least 150 000 components per annum, the whole of the direct materials used would qualify for a discount of 10%.

Required:

Calculate whether it would be profitable for General Components Ltd to add the second shift.


Related Discussions:- Present level of production

List 5 factors affecting productivity, QUESTION a) List 5 factors affec...

QUESTION a) List 5 factors affecting productivity b) List 3 factors affecting productivity which are controllable at company's or project level and 2 factors affecting produ

Consulting and indents passing - library administration, Consulting: C...

Consulting: Consulting work can be done at prescribed  intervals or as and when needed for placing an  urgent order. For this purpose, subject lists are typed out from the car

Kinds of library bindings, KINDS OF LIBRARY BINDINGS: Having got a bri...

KINDS OF LIBRARY BINDINGS: Having got a brief introduction to the processes of binding, lot us discuss the kinds of binding required for the different types of documents in a

Explain the issue of performance management system, Question: (a) Expla...

Question: (a) Explain the issue of Performance Management System and its perceptions by the school organisations in Mauritius. (b) How will the Educational Administration an

Explain what you understand by internal analysis, QUESTION 1 SWOT Matri...

QUESTION 1 SWOT Matrix is one of the principal tools for strategic analysis. Referring to this matrix- (a) Explain what you understand by internal analysis (b) Explain wh

Full life cycle framework in it governance, The full lifecycle framework ...

The full lifecycle framework The objective of this section is to introduce the full lifecycle approach proposed by Berghout et al. (2002). This framework  deals  in an effectiv

Requirements for force account , Requirements for force account  Let us...

Requirements for force account  Let us now look at the requirements for force accounting:  Force account should be justifiable as to why competitive bids cannot be invite

Document delivery service, Document Delivery Service:   The primary res...

Document Delivery Service:   The primary responsibility of the library is to provide the user with the texts (we may call them original documents). If the original documents ar

The principles of job design, QUESTION 1 Business policy aims to meet t...

QUESTION 1 Business policy aims to meet the organisation objectives by maintaining or increasing market share and diversifying or with meeting any financial, political or statu

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd